LEG Immobilien AG
Preliminary FY Results 2014 / Guidance Update
25th February 2015
Disclaimer
While the company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature and is intended to provide an introduction to, and an overview of the Company's business. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external sources, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate.
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Preliminary 2014 results – Strong operating & financial performance
- FFO I €163.6m (+15.9% YOY; from €141.2m)
- NAV €52.69 per share (+6.7% YOY); rental yield 7.2%
- L-F-L rents +3.0% YOY (free financed units +3.4% ); L-F-L vacancy 2.7% (down from 2.9%)
Implementing measures for further accelerating earnings growth
- Maintaining a long-term secured best-in-class financing structure
- Early refinancing of loans to take advantage of attractive environment
- Volume c.€900m (maturities until 2018)
- Targets: avg. cost of debt < 2.3%, weighted maturities >11 years
- Estimated one-time costs €60m; payback 3.5 years
- Speeding-up efficiency programme; Expansion of leading EBITDA margin
- Targeted annual cost savings at least €5m
- EBITDA-margin target 2017: approx. 71% (vs. 2014: 66.5%)
Guidance 2015 & 2016: Further boost in profitability ahead
- FY-2015e: FFO I €195m-€200m (upward revision from €188m-€193m); €3.29-€3.38 per share
- FY-2016e: FFO I €223m-€227m; €3.91 to €3.98 per share
- Pay-out ratio: 65% of FFO I
Expansion of value-added services; LEG leader in innovation
- JV for supply of heating & electricity
- Tender process for strategic partnership nearly completed
- Positive one-time effect + immediate positive recurring income
- Elderly living/outpatient care
- First pilot project of German housing company (cooperation with K&S group)
Highlights
Preliminary Results / Financials
Leading FFO Profitability: Regional Focus + Cost Discipline
- Continued organic outperformance + accretive acquisitions drive FY-2014 earnings
- Regional focus on NRW + high cost discipline result in leading profitability
- Enhancement of adjusted EBITDA margin by +230 bps to 66.5% YOY reflects further improving efficiency
- Headroom for further margin expansion
Preliminary Results / Financials
NAV Growth Adds to Attractive Total Return
- NAV: Valuation uplift of 2.8% driven by strong operating performance
- NAV: Attractive portfolio yield of 7.2%; impairment of 1.5pp due to increased RE transfer tax reflects prudent approach
- LTV: Strong balance sheet basis for attractive financing terms; headroom for growth
Preliminary Results / Financials
Strong Letting Performance Reflects Operational Excellence
- Superior organic growth while maintaining high capital discipline
- Dedicated bottom-up approach; High proximity to customers and markets
- Capex & Maintenance €13.81/ sqm (capex ratio: 48.7%); above average spendings for recent acquisitions
Refinancing Strengthening of Best-in-Class Financing Structure
Pro-forma Maturity Profile: LT Secured Debt, Well-Balanced Maturity Profile, Low Cost of Debt
| Refinancing Targets |
|
| Volume |
approx. €900m |
One-off
charges
(estimate) |
€60m |
Payback
period |
3.5 years |
Avg. debt maturity new
loans |
approx. 10
years |
Avg. interest
cost
- new loans
- replaced old loans |
< 2%
3.86% |
Very attractive refinancing environment for LEG
- Significant decline in credit margins + ultra low rates
- Increasing competition among lenders LEG preferred partner due to strong credit profile
- Window of opportunity to lock-in cheap cost of debt for foreseeable future
Efficiency Programme Agenda for Accelerated Margin Expansion
Restructuring and implementation of capital market standards
- 2008-2012: Extensive group restructuring & reorganisation
- 2013-2014: Built-up of new structures for external growth strategy and capital market requirements
Next phase of LEG's efficiency programme
2015: Accelerated efficiency enhancement – Harvesting the fruits from regional focus
- Comprehensive review of entire structures and processes
- Infrastructure investments completed Time is right for further optimisation of cost structures
- Roadmap for significant increase of EBITDA margin to approx. 71% in 2017 in order to maintain a leading profitability
- Cost savings target of at least €5m annually (full effects starting FY-2016)
- Further upside to margin targets from acquisitions at low incremental costs
Value-Added Services Creating Additional Value with New Value-Added Services
LEG leader in innovation for tenant related services
- Very successful start of cable business in FY-2014
- Supply of heating and electricity
- Transfer of heating systems to a JV with strategic partner
- Financials: Positive one-off selling price, additional source of recurring income
- Status: Tender process in advanced stage
- Kick-off: H2-2015
- Outpatient care for elderly tenants
- Pilot project with nationwide service supplier K&S group
- 1,400 units in Dortmund-Wickede; on-site service point
- LEG with holistic approach to keep senior tenants in their own apartments (incl. refurbishment)
Guidance 2015 & 2016
- Clear and focussed business model/strategy
- Long-term secured financing
- High capital discipline
- Bolt-on acquisition with high synergies and low execution risk (FFO yield >8%, no NAV dilution)
Outlook 2015 & 2016
| 2015 |
Guidance |
| FFO I: |
€195m -
€200m/ €3.42 -
€3.50; excl. future acquisitions |
| L-F-L rent growth: |
2.3% -
2.5% |
| L-F-L vacancy: |
≤ 2.7% |
| Maintenance/Capex: |
€15/sqm
(capex
ratio c. 50%) |
Acquisitions (mid
term target): |
≥ 5,000 units p.a. |
| Dividend: |
65% of FFO I |
| 2016 |
Guidance |
| FFO I: |
€223m
-
€227m/ €3.91 -
€3.98; excl. future acquisitions |